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IP Regime and its Effect on Knowledge-Economy

: South Korean IP Perspective

October 2013

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Table of Contents Introduction about the Firm

I. Korea’s Present Status in IP worldA. IP Expansion following by GDP B. Position in IP5

 II. Korean’s Future : Paradigm shift for IP trade Balance

A. Still suffer from Big IP trade deficitB. Reasons for the deficitC. Korean government and companies now focus on new paradigm

- New way to create IP- New way to protect IP- New way to monetizing IP

Executive Summary Q & A

Introduction

• H.C. Park & Associates, PLC (HCPA) is headquartered in Reston, Virginia, USA

• HCPA was established by myself in 2005, as a full-service intellectual property firm uniquely positioned to serve its domestic and international clients in today’s global IP community.

• HCPA has 45 patent professionals residing at USA ,Korea and Pakistan.

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• Major Clients (95% Korean Company) are

• In Prosecution, 600 new Applications, 3500 filing in 2012.

• In Litigation, HCPA has over 20 pending patent litigations before US Federal Courts and International Trade Commission (ITC)

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Number of New Applications

600

Number of Filings (excluding new patent applications)

3500

Introduction

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Table of Contents Introduction about the Firm

I. Korea’s Present Status in IP worldA. IP Expansion following by GDP B. Position in IP5

 II. Korean’s Future : Paradigm shift for IP trade Balance

A. Still suffer from Big IP trade deficitB. Reasons for the deficitC. Korean government and companies now focus on new paradigm

- New way to create IP- New way to protect IP- New way to monetizing IP

Executive Summary Q & A

• Korea’s GDP has increased 70% for last 14 years (1 1.7 point)

• In same period, number of IP has increased over 100 %

Patent 1 2.3 point

Trademark 1 2.1 point

Design 1 2.6 point

IP Expansion following by GDP

IP Expansion has been proportional to GDP in case of Korea 

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IP Expansion following by GDP

IP Expansion has been achieved in Korea’s major industry _ Semiconductor, Audio-visual tech(TV), Computer, Telecommunication.

Field of Technology Share (%)Semiconductors 10.05Audio-visual technology9.19Computer technology 7.56Telecommunications 7.31Electrical machinery, apparatus, energy7.29Optics 5.39Transport 4.61Digital communication 3.98Civil engineering 3.52Other consumer goods 3.23Others 37.87

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Position in IP 5

What is IP 5

The Five IP Offices (IP5) is the name given to a forum of the five largest intellectual property offices in the world that is being set up to improve the efficiency of the examination process for patents worldwide.

the European Patent Office (EPO),the Japan Patent Office (JPO),

the Korean Intellectual Property Office (KIPO),the State Intellectual Property Office of the People's Republic of China (SIPO), and the United States Patent and Trademark Office (USPTO).

The IP5 Offices account for 90% (accumulate) of all patent applications filed worldwide and for 93% (accumulate) of all work carried out under the Patent Cooperation Treaty (PCT).8

Position in IP 5

Number of IP5’s patent application has occupied around 80% in every year.

• In 2011, # of whole patent application

= 2,139,900

• # of IP5’s Patent application =1,694,321

• The ratio is 79.2 %

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Position in IP 5

Korea has filed patents around 170, 000 per year, which is ranked in 4th among IP5.

• In 2011, 1. SIPO 526,400 2. USPTO 503,600 3. JPO 342,600 4. KIPO 178,900 5. EPO 142,800

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Position in IP 5

Korea has additional around 100,000 issued patents in every year, which is ranked in 4th among IP5.

• In 2011, 1. JPO 238,300 2. USPTO 224,500 3. SIPO 172,100 4. KIPO 94,700 5. EPO 62,100

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Position in IP 5

However, Korea is ranked first in number of patent application per $ 1 B GDP.

• In 2011, 1. KIPO 188.8 2. JPO 77.7 3. SIPO 46.6 4. USPTO 33.5

This means Korea has invested lots of efforts in Patent in view of GDP 

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Position in IP 5

Korea is also ranked first in number of patent application per $ 1 M R&D investment.

• In 2011, 1. KIPO 3.7 2. SIPO 3.5 3. JPO 2.9 4. USPTO 0.9

This means Korea has invested lots of efforts in Patent when they do research and development.  13

Position in IP 5

As an example, Samsung has ranked first in number of patent filing in China since 2008

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Position in IP 5

As an example, Samsung and Apple are now fighting with design patents in world wide.

Samsung has design patents 3 times more than Apple in USA.

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Part Summary IP Expansion has been proportional to GDP in

case of Korea. IP Expansion has been achieved in Korea’s

major industry _ Semiconductor, Audio-visual tech(TV), Computer, Telecommunication.

Korea has invested lots of efforts in Patent in view of GDP and R&D budget.

Based on the efforts, Korea becomes IP5 and several Korean companies such as Samsung and LG become world IP leaders.

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Table of Contents Introduction about the Firm

I. Korea’s Present Status in IP worldA. IP Expansion following by GDP B. Position in IP5

 II. Korean’s Future : Paradigm shift for IP trade Balance

A. Still suffer from Big IP trade deficitB. Reasons for the deficitC. Korean government and companies now focus on new paradigm

- New way to create IP- New way to protect IP- New way to monetizing IP

Executive Summary Q & A

Still suffer from Big IP trade deficit

During last decade, Korea has still $ 2~5 B deficit in IP trade balance, although IP volume of Korea has ranked 4th in world wide.

5 Countries has surplus/deficit IP trade balance

Amount of deficit in IP trade balance _ Korea

Korea

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Reasons for the Deficit Heavy dependency on Export

In First half of 2013,

- Korea has 42 B $ surplus in trade balance. - Specially, Samsung, LG and Pantech’s mobile phone export has been increased up

to 11.64 B $.- Total IT export to USA is 8.22 B $.

Major export products are major subject for patent enforcement and licensing

- During 2006~2012, Korea mobile phone manufactures paid NPEs 1.5 B $

(Source : Joongang News 2012.04.02)

(Source : Korea Ministry of Science, ICT and Future Planning)

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Reasons for the Deficit

As an example, NPEs do like Korean Companies because of big revenue in USA.Top 10 companies who have litigations with NPEs

2. Samsung

3. LG

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Reasons for the Deficit

As an example, one of NPEs (Interdigital) has around 50 % revenue from Korea during 2010~2012.

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Korean needs new paradigm for reducing the deficit and turn it to Surplus

New Paradigm – New way to create IP

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•Target of R&D is purely creation of IP•Value of IP itself is major evaluation element of R&D

IP R & D

•Consulting from idea stage to IP registration•Company can have loan with IP

IP Incubation

•IP mining to complete IP portfolio•Aggressive purchasing mined IP

Purchasing IP

New Paradigm – New way to protect IP

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•Pre-Purchase or licensing potential risk IP•After risk hedge, resale the IP

Defensive NPE

•Establish favor environments for manufactures who have IP (Tax, Loan)

Collaboration between Company and Government

•Combine strategically domestic and foreign IP•With using IP in the Pool, jointly actsIP Pool

New Paradigm – New way to monetizing IP

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•Consider a company who has only IP as a venture company•Fund for IP loan or fund for IP enforcement

IP Venture Capital

•Anti-Pro Patents : open to anyone who wants to use patented technology.•Grant non-exclusive license with favorable royalty rate

Operation of positive Licensing

Program

•Actively monetizing IP with low cost by using a contingency law firms.

Collaboration with Contingency

law firms

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Table of Contents

Introduction about the Firm

I. Korea’s Present Status in IP worldA. IP Expansion following by GDP B. Position in IP5

 II. Korean’s Future : Paradigm shift for IP trade Balance

A. Still suffer from Big IP trade deficitB. Reasons for the deficitC. Korean government and companies now focus on new paradigm

- New way to create IP- New way to protect IP- New way to monetizing IP

Executive Summary Q & A

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Executive Summary KR has achieved lots of success in volume of IP and

position in IP world (e.g. IP 5) ,which has been driven by several Big companies and

government. but still have a heavy deficit in IP trade balance

caused by heavy dependency on export and dependency on several major products which are subject of IP enforcement and licensing .

Now, Korean government and companies focus on IP economy with new ways_ IP Mining, IP Incubation, IP Pool, IP R&D, IP capital.

Pakistan needs to focus on IP volume expansion first and then move to IP Economy by enhancing IP Mining, IP Incubation, IP Pool, IP R&D, IP capital.

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Thank you

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Q & A